Tea party leader Dick Armey gets first-class treatment

Dick Armey is a former House Majority Leader and current chairman of FreedomWorks, which serves as a hub for tea party groups nationwide. He makes $500,000 a year, flies around the country in first class (along with his companions) and at times has had a driver.

Given his lifestyle, he seems an odd choice as a leader of a movement that is "a populist reaction to the smug elitism of our political class," as tea partiers Ralph Benko and Mark Meckler wrote in 2010.

The notion that Armey represents a populist movement is "foolish, of course," said Theda Skocpol, a Harvard professor and co-author of a book about the tea party. "The man was Majority Leader ... He's a fabulously well-paid, right-wing business lobbyist."

But reflecting the view of other chapters, Mandile said Armey is "not the voice of the tea party."

"They don't speak for us. We use them as an educational tool," agreed Terry Campbell, president of the tea party organization in San Angelo, Texas.

Armey did not respond to requests for comment for this story.

For Campbell, the tea party is more about working hard to get ahead, which is why he says Armey's perks don't bother him.

"More power to him, if he can get that in his contract," said Campbell. "That has nothing to do with the message he's putting out."

Matt Kibbe, president of FreedomWorks, said Armey's "aggressive travel schedule" necessitates the first-class air travel.

"I need someone who can be comfortable and be ready to go when he gets on the ground," Kibbe said.

Kibbe makes $321,000 per year, which, like Armey's salary, is split between FreedomWorks Inc., a 501(c)(4) "social welfare" organization, and FreedomWorks Foundation, a 501(c)(3), which holds the same tax status as a charity or nonprofit hospital.

Kibbe's wife, Terry, has received payments for "management consulting" for between $49,000 and $66,000 annually. Kibbe said she is now a fundraiser for FreedomWorks, but he stressed that he was not involved in the contract negotiations to "avoid a conflict of interests."

FreedomWorks trains individual tea party groups in the art of creating a political movement. Group representatives show volunteers how to "get out the vote" and provide them with talking points they can use to challenge President Barack Obama. But even though the group is highly critical of the federal government, its two leaders epitomize Washington culture.

Armey, chairman of FreedomWorks Inc., the politically active, nonprofit social welfare organization and FreedomWorks Foundation, was House Majority Leader from 1995 to 2003. Along with Newt Gingrich, who was about to become Speaker of the House, he was an author of "Contract with America," the House Republicans' 1994 election manifesto and legislative program.

After leaving Congress, he worked for law and lobbying firm DLA Piper for six years. At DLA Piper, a heavy hitter in the Washington lobbying world, Armey was a senior advisor and the firm's co-chair on homeland security, according to an archived profile from the firm's website.

Armey lobbied for companies ranging from General Motors to defense contractor Raytheon to pharmaceuticals developer the Medicines Company, according to federal lobbying records.

But when DLA Piper's pharmaceutical clients complained about his work with FreedomWorks in 2009, Armey left the firm, according to The New York Times. The group opposed Obama's health care bill, which the drug companies supported.

Armey then joined FreedomWorks full time.

Kibbe is considered an architect of the tea party and often acts as a spokesman.

In Give Us Liberty: A Tea Party Manifesto, Armey and Kibbe devote an entire chapter to shaking up "the status quo" and seeking to position the tea party outside the purview of old-guard Republicans.

Kibbe was chief of staff for Rep. Dan Miller, R-Fla.; he was senior economist for the Republican National Committee and executive vice president of Citizens for a Sound Economy.

That group broke up in 2003, spinning off a foundation that became Americans for Prosperity. In 2004 Citizens for a Sound Economy, with Kibbe as president, merged with Empower America to become today's FreedomWorks.

Citizens for a Sound Economy was an industry-funded think tank that promoted deregulation. It was funded in large part with money from brothers Charles and David Koch -- at least $13 million over the course of its life, according to Skocpol and Vanessa Williamson's book. When it broke up, the Kochs continued to fund Americans for Prosperity but apparently not FreedomWorks.

The larger Americans for Prosperity is also a major backer of the tea party movement and engages in similar anti-big government, large-scale activities and protests. Like FreedomWorks, Americans for Prosperity uses the national stage to further its agenda and reaches out to local groups to bring them into the fold by providing trainings and resources.

FreedomWorks' office at 400 N. Capitol St. houses a one-stop political shop comprising four major organizations:

FreedomWorks Inc., a nonprofit (c)(4) "social welfare" organization that can receive and spend money on political campaigns, but cannot make direct contributions to candidates and is not required to reveal its donors.

FreedomWorks for America, a "super PAC," which can receive unlimited donations from wealthy individuals, unions and corporations and spend the funds to support or oppose candidates. Donations must be disclosed.

FreedomWorks PAC, a traditional political action committee that can receive contributions of up to $5,000 and give up to $5,000 to a candidate.

As one of the major organizations of the tea party, FreedomWorks says on its website that its mission is "to fight for less government, lower taxes, and more freedom."

To that end, the super PAC has spent $1.3 million on independent ads in the current election cycle, roughly half against Sen. Orrin Hatch, R-Utah, and a smaller portion against Obama, according to the Center for Responsive Politics.

The four organizations are legally separate entities.

The super PAC is run by Ryan Hecker, its COO, and Russ Walker, its executive director. While the super PAC shares the Washington office with the other branches of FreedomWorks, neither Hecker nor Walker is based in the District, which helps keep the super PAC separate from the nonprofits, Hecker told iWatch News.

Walker, however, is also involved with FreedomWorks Inc., the (c)(4), serving as vice president of political and grassroots campaigns.

FreedomWorks Inc.'s revenue has steadily increased over the years. In 2007, it reported $2.2 million, and by 2010 (the most recent tax filing available), its revenue had grown to $9.3 million. From 2009 to 2010 alone, revenue more than doubled.

FreedomWorks for America received nearly half of its income this election cycle from FreedomWorks Inc. -- that's $1.5 million out of $3.5 million from anonymous sources, according to an examination of Federal Election Commission records.

Most was in the form of in-kind contributions for staff, rent, legal services and travel, the super PAC's FEC filing shows.

The sharing of administrative costs is simply to help the super PAC, founded in September, get off the ground, said Hecker, the COO and legal counsel for FreedomWorks for America.

But Fred Wertheimer, president of Democracy 21, a group that advocates for openness in political giving, said that's beside the point.

"This is a form of laundering secret money to a super PAC," he said. "The bottom line here, whether it's legal or illegal, is that they are improperly hiding donors who are providing financial support to a super PAC that is supposed to be disclosing its donors."

Nonetheless, this sort of setup is fairly common, according to campaign finance lawyer Ken Gross.

"Certainly it's not unusual for a (c)(3) and a (c)(4) and a political committee to share office facilities and sort out the allocation of the cost by one reimbursing another," Gross said, adding that throwing in a super PAC doesn't change much.

This money transfer may sidestep disclosure requirements, but it is legal, Wertheimer said. It would only be illegal if the donors to the nonprofit specifically asked that their money be anonymously passed through to the super PAC.

Kibbe, FreedomWorks' president, stressed that the super PAC and the nonprofit are acting within the law.

"We have a clear firewall that limits communication," Kibbe said. "We set it up clearly to adhere to what the law stipulates."

Newsweek's Daniel Stone contributed to this report. A previous article about FreedomWorks was produced in partnership with Newsweek.